Investing during the month of December was like traversing an icy mountain stream. It delivered a staggering shock to the senses that triggered the instinct to, “Get Out!”

When it comes to investing, that instinct is called loss aversion. For many people avoiding a loss is more important than realizing a gain. Simply put, not losing $100 is more important than gaining $100.

Erica Goode of The New York Times talked with psychologists Daniel Kahneman and Amos Tversky about a series of experiments they had conducted to measure loss aversion. The pair found relatively few people would bet money on a flip of a coin unless they stood to win at least twice as much as they might lose.

The desire to avoid losses is the reason many people sell stocks when the value of the stock market is declining. Unfortunately, it may be a poor choice for a variety of reasons. For example,

• Downturns are temporary. The Schwab Center for Financial Research evaluated the performance of the Standard & Poor’s 500 Index since 1966 and found, “the average bull ran for more than four years, delivering an average return of nearly 140 percent. The average bear market lasted a little longer than a year, delivering an average loss of 34.7 percent.”

While past performance is no guarantee of future results, understanding the history of gains and losses in bull and bear markets is critical because it can help investors avoid potentially costly mistakes.

• Markets rebound. Consider December 26. It was the best day for stocks in nearly a decade. The Dow Jones Industrial Average rose 1,000 points, posting its biggest daily gain in history.

Investors who were not invested in stocks missed an opportunity to participate in a market rebound. Despite significant gains late in the month, there is a chance this will be the worst December performance since 1931, reported MarketWatch.

• Your long-term life and financial goals haven’t changed. Sometimes, investors have to traverse an icy stream, or muck across a muddy patch, as they move toward their goals. Your portfolio should be built to help you pursue specific life and financial goals. It may be well diversified to help moderate losses when you encounter challenging market conditions. Consequently, if your long-term goals have not changed, selling during a downturn could make it more difficult to reach your goals.

However, if you’re experiencing a high level of discomfort as the stock market fluctuates, it may be important for you to re-evaluate your risk tolerance and make any changes necessary to your asset allocation.

One of the most important aspects of our work as financial advisors has little to do with asset management or investment selection. It has everything to do with helping our clients make better financial decisions. We try to provide information and advice – coaching, if you will – that may help our clients avoid mistakes that may make it more difficult to achieve their goals. We also encourage clients to embrace choices which are likely to help them work toward their goals.

If you find yourself debating whether to hold your investments or sell them, please give us a call before you do anything. We welcome the opportunity to talk with you about what’s happening and offer some context which may help set your mind at ease.

If changes are necessary, we can help you identify options and weigh the pros and cons of each. Our goal is to help you work toward your goals.

Synaptic Pruning and Habit Stacking

If you have some New Year’s resolutions you would really like to keep then you may want to try habit stacking. It’s an idea that harnesses brainpower to help you achieve your goals.

Brains are powerful tools. They help us form connections and, when those connections are no longer used, our brains conduct synaptic pruning to get rid of the connections, according to James Clear author of Atomic Habits.

As a result, our brains are full of strong connections that support certain skills. That’s the good news. The bad news is, by a certain age, we’ve trimmed a lot of neurons, which can make it challenging to form new habits. Clear wrote,

“When it comes to building new habits, you can use the connectedness of behavior to your advantage. One of the best ways to build a new habit is to identify a current habit you already do each day and then stack your new behavior on top. This is called habit stacking… For example:

• After I pour my cup of coffee each morning, I will meditate for one minute.

• After I take off my work shoes, I will immediately change into my workout clothes.

• After I sit down to dinner, I will say one thing I’m grateful for that happened today…”

Once you’ve mastered habit stacking, you can begin to form chains of habits. Imagine where that could take you!

Weekly Focus – Think About It

“Excellence is an art won by training and habituation: we do not act rightly because we have virtue or excellence, but we rather have these because we have acted rightly...”

–Will Durant, American philosopher

How To Ring In The New Year In 2019:

Times Square Ball Drop:

An estimated 1 million people venture to Times Square in New York City to watch the New Year’s Eve Ball begin its descent a minute before midnight and to count down the final seconds before the new year begins. More than 1 billion people watch worldwide in a collective welcome to the new year as the illuminated Waterford crystal ball is lowered down a 21-meter pole.

Auld Lang Syne:

Roughly translated as “For the sake of old times,” Americans, and many in the English-speaking world, sing this old Scottish ballad near the midnight hour. The song is about old friendships and acts of kindness in years past, and is widely used to mark endings, farewells and new beginnings.

Kissing At Midnight:

The tradition to kiss the first person you see at the stroke of midnight is rooted in German and English folklore. According to tradition, a favorable first encounter will set the tone for the rest of the year.

Black-Eyed Peas:

Americans in the Southern states believe that eating black-eyed peas on New Year’s Day will bring them good luck and wealth. Many Southerners prepare the pea stew with a new coin and the person who receives it in their portion is considered to be extra lucky. Adding cooked greens to a black-eyed pea dish symbolizes a prosperous new year.

Fireworks:

Fireworks on New Year's eve is believed to have originated in ancient times, when noise and fire were thought to dispel evil spirits and bring good luck. The Chinese are credited with inventing fireworks and use them to spectacular effect in their New Year's celebrations.

New Years Resolutions:

A New Year's resolution is a promise a person makes for the new year. Regardless of what resolution you commit to, the goal is to improve life in the coming year. Resolutions can come in many forms. Some people make a promise to change a bad habit, such as quitting smoking or eating less junk food.

Happy New Year from all of us here at Cornerstone Wealth management Partners!

December Fun Facts!

Time Square New Year’s Eve Ball was first dropped in 1907 after there was a fireworks ban. The original ball weighed 700 pounds and featured 100 25-watt bulbs. Much different to the ball we know today!

* Securities offered through LPL Financial Member FINRA/SIPC.

* This newsletter was prepared by Peak Advisor Alliance. Peak Advisor Alliance is not affiliated with the named broker/dealer.

You cannot invest directly in this index.

* The Standard & Poor's 500 (S&P 500) is an unmanaged index. Unmanaged index returns do not reflect fees, expenses, or sales charges. Index performance is not indicative of the performance of any investment.

* The 10-year Treasury Note represents debt owed by the United States Treasury to the public. Since the U.S. Government is seen as a risk-free borrower, investors use the 10-year Treasury Note as a benchmark for the long-term bond market.

* Gold represents the London afternoon gold price fix as reported by the London Bullion Market Association.

* The DJ Commodity Index is designed to be a highly liquid and diversified benchmark for the commodity futures market. The Index is composed of futures contracts on 19 physical commodities and was launched on July 14, 1998.

* The DJ Equity All REIT TR Index measures the total return performance of the equity subcategory of the Real Estate Investment Trust (REIT) industry as calculated by Dow Jones.

* Yahoo! Finance is the source for any reference to the performance of an index between two specific periods.

* Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.

* Past performance does not guarantee future results.

* You cannot invest directly in an index.

* Consult your financial professional before making any investment decision.

* Economic forecasts set forth may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

* Stock investing involves risk including loss of principal.

his information in not intended to be a substitute for specific individualized tax or legal advice. We suggest that you discuss your specific situation with a qualified tax or legal advisor.

* The Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basked of consumer goods and services.

* Harmonized Indexes of Consumer Prices are measures of consumer price inflation that have been standardized across multiple countries based on European Union definitions. A monthly report compiles HICP trends for 16 economies, alongside conventional Consumer Price Indexes (CPI) as measured by national governments.

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